Published February 19, 2012

by iris_author

Ontario Premier Dalton McGuinty’s government is widely seen to have survived the province’s October 2011 election less as a result of its own appeal to the electorate and more as a result of errors and misfortunes on the part of PC Leader Tim Hudak. The government was seen to be tired, and out of ideas about how to move forward on the economic, social and environmental challenges facing Ontario. The first few months of the government’s new minority mandate have been notable only for the lack of new initiatives and the ORNG air ambulance debacle.

The Report of the Commission on the Reform of Ontario’s Public Services (a.k.a. the Drummond Report) has, to some degree, now provided a government that was in search of an agenda with one.  Whether it is an agenda that will serve Ontario’s interests well in the long term is another question altogether. The Commission’s report is extremely broad in its scope, and its most interesting, imaginative and detailed aspects deal with health care.

The report’s other elements vary greatly in their depth and originality. Its sections dealing with electricity, the environment, natural resources management and land-use, for example, are generally thin on new analysis and largely endorse the government’s existing policy directions. There are remarkably few new ideas and quite a few old ones of very doubtful value. Further “streamlining” an environmental assessment process that has already been ‘reformed’ to a point of virtual meaninglessness and increasing the reliance on not-for-profit corporations controlled by the industries they are supposed to regulate hardly look like progress  from the perspective of advancing sustainability or protecting public safety, health and the environment.

More generally the report, with its focus on “efficiencies,” lacks any overall positive vision for where the province should be going.  It does ask the government to articulate an “economic vision” for Ontario – highlighting by implication the government’s failure to effectively provide such a vision so far. The lack of any underlying sense of the way forward makes it difficult to evaluate the wisdom of the bulk of Drummond’s proposals. This is particularly true with respect to education, an area with major implications in terms of longer-term economic and environmental strategy.

Moreover, the report is almost entirely focussed on the expenditure side of the equation. In fairness to Mr.Drummond that limitation was imposed by the government. There are strong suggestions that the province review the usefulness of its existing $1.3 billion per year in direct business support and $2.3 billion per year in corporate tax expenditures. However, there are few specific recommendations or any sense of the potential to generate additional revenue by closing loopholes that have long outlived their purposes or which may have been of questionable value in the first place. Some modest opportunities to generate new revenues through user fees (e.g. charging for parking at GO terminals and full cost pricing of sewer and water services) and terminating the pre-election gimmicks of the undergraduate university tuition fee rebate and the Clean Energy Benefit on electricity bills are identified, and there is some discussion of the possibility of road tolls as a transit funding mechanism, but there is no discussion of more substantial options on the revenue side.

The cancellation of the final stage of the government’s corporate tax cuts seems likely at this stage. Given the burdens in terms of lost services and increased user fees that ordinary Ontarians are being asked to accept, some contribution from a business community that has benefitted from a succession of tax cuts will be politically essential.  That step would save about $800 million per year in revenues.

More serious revenue options like occupying some of the tax room vacated by the federal government when it cut the GST  by increasing the provincial portion of the HST, – or better still more ambitious strategies like the introduction of a carbon tax (something Mr.Drummond himself proposed in 2008) have not been put on the table. Given the scale of the impact of Mr.Drummond’s proposals, those options need to become part of the conversation.

Even Toronto Mayor Rob Ford (with considerable prompting from city council) when faced with similar challenges, recognized the need to move on the revenue side to moderate the need for damaging expenditure reductions. The risks of the province mortgaging its future by focussing exclusively on expenditures are far too large for it to ignore the same alternative.

A declining US market for exports, the difficulties for export-oriented value-added economic activities posed by a rising Canadian dollar driven by resource exports from western Canada, the regional impacts of climate change, the rural-urban split evident in the outcome of the 2011 election, and a federal government oriented towards the interests of the Alberta, have all contributed to the challenges facing the province. But more imagination and vision that what Mr.Drummond has offered will be needed to put the province back onto a path towards sustainability and prosperity.

Mark Winfield’s new book Blue-Green Province – The Environment and the Political Economy of Ontario has just been published by UBC Press.

Posted in: Blogs | Sustainable Energy

Published February 15, 2012

by iris_author

General Observations

As expected the Report of the Commission on the Reform of Ontario’s Public Services (a.k.a. the Drummond Report) report is extremely broad in scope. The report’s most interesting, imaginative and detailed aspects deal with health care. Its elements related to electricity, the environment, natural resources management and land-use, by contrast generally lack depth and largely endorse the government’s existing policy directions. There are remarkably few new ideas in these areas and quite a few old ones of very doubtful value from the perspective of advancing sustainability or protecting public safety, health and the environment. Think the “common sense revolution” with a human face with respect to these topics.

(For a more detailed discussion of the report’s overall implications see my February 19th post http://marksw.blog.yorku.ca/2012/02/19/the-drummond-report-and-ontarios-future/)

Environment, Energy, Natural Resources and Public Safety Highlights

Some of the highlights in terms of energy, the environment, natural resources management, land-use and public administration are as follows.

Chapter 12 – Infrastructure Real Estate and Electricity

Public Infrastructure

• The report endorses a move to full cost recovery on water and wastewater services by municipalities and the Ontario Clean Water Agency, a recommendation made a decade ago by the Walkerton Inquiry and yet to be fully implemented.

Transportation

• The report recognizes that the gap between Metrolinx’s transit plans and committed funding resources is “the elephant in the transit room”

Electricity

• The Commission recommends that an Integrated Power System Plan based on the province’s Long-Term Energy Plan be adopted. The recommendation seems to ignore the consideration that the Commission’s own conclusions regarding future rates of economic growth throw fundamental assumptions about the future of electricity demand underlying the plan into doubt.

• The report recommends that the impact of the Green Energy Act on electricity prices be mitigated by lowering FIT rates and introduce digression rates to reduce the tariffs over time – directions in which the government is likely to move as a result of the FIT review. The impacts on electricity prices of cost-overruns on nuclear refurbishment projects are by contrast ignored.

the Report suggests a stronger emphasis on competitive request for proposal bidding processes for acquiring new electricity supply, although it is ambiguous about whether the implied criticism is directed at the FIT program, the province’s approach to procuring conventional supply (particularly nuclear) or both.

• The commission’s other recommendations include the termination of the Ontario Clean Energy Benefit as soon as possible and increases in the ratio of peak to off-peak electricity rates. There are also the usual calls for some sort of “rationalization” of the roles of the alphabet soup of agencies involved in the electricity sector.

Chapter 13 – Environment and Natural Resources

Ministry of the Environment Approvals Reform

• The report provides an unqualified endorsement of the Ministry of the Environment’s approvals reform project. This is despite very serious concerns that have been raised about its impact on environmental protection and the rights of the public to participate in environmental decision-making (see http://www.cela.ca/sites/cela.ca/files/720.ModernizingApprovalsProcess.pdf). The report emphasizes the importance of “risk-based” approaches to approvals, but makes no mention of the failure of the existing process to deal with the cumulative effects of emissions from multiple sources – a problem likely to be exacerbated by the approvals “reform” process.

Environmental Assessment

• The report pulls out some very old chestnuts regarding environmental assessment. There are calls for further streamlining of the environmental assessment process – a surprising recommendation given the Environmental Commissioner’s recent conclusions that the Ontario process has already been “streamlined” to the point of virtual meaninglessness (http://www.ecoissues.ca/index.php/Environmental_Assessment:_A_Vision_Lost) The report also calls for “substitution” of federal and provincial EAs for each other – again a surprising suggestion given that the evidence of federal/provincial overlap in this area in Ontario is virtually nil (the same conclusion applies the Commission’s more general recommendation regarding the overlap of environmental responsibilities between the province and the federal government). The more serious question that exists is the lack of any meaningful assessment by either level of government of the major mining projects taking place (first the Victor Diamond Mine in Attawapiskat and now the “Ring of Fire” development) in Ontario’s far north.

Cost Recovery

• More positively the report recommends moves towards full cost recovery for sewer and water services and environmental approvals, and a more meaningful pricing regime for water takings.

Natural Resources Management and Land-Use in Southern Ontario

• The report includes a vague recommendation of the consolidation of various agencies involved in natural resources management and land-use planning in southern Ontario. Given the diversity of the mandates and functions of the agencies involved this could prove vastly more complex than it sounds. Whether it would lead to better policy implementation on the ground is another question altogether.

Environmental Liabilities and Financial Assurances

One area where the report does recommend strengthening the province’s approach is with respect to requirements for financial assurances for activities which may leave the province with environmental liabilities – mines sites, for example where if an operator goes bankrupt the province could be left with the costs of closure and perpetual care of the site, tailings and waste rock. These requirements were weakened significantly through the Harris governments notorious Bill 26 – the Savings and Restructuring Act. The report also recommends a Superfund-like mechanism to finance the remediation of abandoned contaminated sites.

Chapter 16 – Operating and Back-Office Expenditures

Delegated Administrative Authorities

• The report provides an unqualified endorsement of Delegated Administrative Authority model for government regulatory functions. This is despite some spectacular regulatory failures on the part of such agencies in Ontario (e.g. the Sunrise Propane explosion) and long-standing concerns regarding accountability, performance, cost-effectiveness and desirability of separating regulatory and policy functions (see my commentary on the TSSA and the Sunrise Propane explosion (http://marksw.blog.yorku.ca/2010/05/07/public-safety-in-private-hands-rethinking-the-tssa-model-published-in-the-toronto-star-august-2008/) and work on this subject for the Walkerton Inquiry (http://www.pembina.org/pub/37).

Mark Winfield’s new book Blue-Green Province – The Environment and the Political Economy of Ontario has just been published by UBC Press.

Posted in: Blogs | Sustainable Energy